cuts implemented, there are reports of these problems already. i along with congressman burrell and 60 other members of congress have signed a letter opposing other cuts to the m.a. program. i urge my colleagues on the committee to make the same commitment to their constituents who have come to rely upon medicare advantage. i yield. >> i yield by time back to the chairman. >> fred? >> yield to mr. shimkus. spent did you yield to me? i thank the chairman. i thank the chairman for yielding. look, medicare advantage has been around since what? the late '80s? it was all medicare plus choice, then it was medicare advantage. but the word advantage just means exactly what it says, it's an advantage. it's kind of interesting that the democrats integrating this

affordable care act demanded that coverage at policies have minimum coverage requirements, and that's why because the cost of many of those policies have gone up and people have been notified and then they cannot get those policies january 1 of 2014 because the there demandedo include some an additional things. why would medicare advantage not cost more? because there are more things in it, more provisions, preventive care, annual physical examinations, a nurse checking up to make sure that the patient got the medications filled, return for their appointment and timely follow up. so together that program and that's what this is all about, i'm looking forward to what the witches has to say about it. it made no sense to cut $300 billion out of a program that 29% of medicare beneficiaries had chosen, and it's gone up over the years, each and every year but i just

about. >> the gentleman's time has expired. the chair recognizes the ranking member america's mr. dingell five minutes for an opening statement. >> thank you for your courtesy. i commend you for this hearing. my questions will require a yes or no answer. -- >> we are not to questions yet. your opening statement spent i don't have an opening statement. i'm going to have fun with my questions. thank you, mr. chairman. >> the opening statements have been made by the members. i will now introduce our panel of five witnesses. and the first is mr. douglas holtz-eakin, president the american action forum. mr. joe baker, president of medicare rights center. dr. bob margolis, ceo, health care partners, co-chairman. ms. marsha gold, senior fellow,

mathematica policy research, and mr. jon kaplan, senior partner and managing director of the boston consulting group. your written testimony will be made a part of the record. you have five minutes to summarize your testimony. at this time the chair recognizes mr. holtz-eakin for five minutes for an opening statement. >> thank you chairman, ranking member pallone. let me take this opportunity emphasize a few points that are made in a written statement. first i said and pointed out by the chairman and others in opening statements is that medicare advantage is a valuable and popular part of medicare. nearly 30% of beneficiaries voluntarily enrolled in the increasing enrollment each year and it does provide extra services and innovative approaches to health care in the medicare program. it disproportionally serves lower income beneficiaries and minorities and has been -- the program of choice for them. but most importantly medicare advantage is not a fee-for-service medicine and does it represent an important

opportunity to move away from the practice of medicine has proven costly and that rewards volume over quality in the american health care system. unfortunately, medicare advantage is under a fourfold funding reduction due to provisions in the affordable care act and others were recently. the first, it stems from reduction for fee-for-service spending per se. the second, a modification of the medicare advantage benchmark relative to fee-for-service spending in each county. the third, the implications of a health insurance taxable come online in 2014 which will affect many m.a. plans and for the act as a pressure on the ability to provide benefits. and the fourth the recent requirement that cms provide changes in the coding intensity for medicare advantage plan. the result of these changes are inevitable. the first will be fewer plants. estimates are range from 60-140 fewer plants in 2014.

there are reports of 10,000 cancellation notices in ohio, 50,000 in the state of new jersey. and these all represent further violations of the pledge that if you like your health insurance you can keep it under the affordable care act. in addition there will be fewer and those are projections are that will be up to 51 fewer by 2019 when the aca cuts are fully implement did it and these reductions are disproportionately borne by lower income americans the estimates are about 75% of the impact hit those making less than $34,200. the next step for those plans that do survive is to pass along these reductions in the form of either heart posturing or reduced benefits, or more limited networks that provide beneficiaries with fewer choices. these are not the voluntary decisions of insurers. these are the natural consequences of the law which limits their ability to provide options to beneficiaries. going forward i would emphasize that it's important to preserve

this stepping stone to coordinated care, the better practice of medicine and medicare, and that it would be extremely undesirable for congress to repeat the practice of using medicare advantage as a funding source for further expansion of a program initiative. this is a valuable program that has proven on the ground to provide high quality care, individual approaches to medicine and is the popular choice of many of the least of all beneficiaries. further reductions aren't undesirable policies do. i think you and i look forward to answering your questions. >> the chair thanks the gentleman and recognizes mr. baker for a summary of his opening statement. >> thank you. thank you, mr. chairman and ranking member pallone, interesting which members of the subcommittee. medicare rights is a national nonprofit weatherization that works to ensure access to affordable care for older adults and people with disabilities and we thank you for this opportunity to testify on the

medicare advantage program. each year we council thousands of people with medicare advantage about topics ranging from and we went to appealing a deny claim. we find the medicare advantage plans are a good option to some but not all people with medicare. many of our callers are satisfied with the plan and the inquiries are easily resolve. others find navigating a medicare advantage plan challenge. these cosmic struggle to resolve billing issues, cobra coverage denials, compare plan details and other issues. in particular we observe that people find choosing among medicare advantage plans sometimes a dizzying extremes. we urge people every year to visit their plans coverage as annual changes to plan benefits, cost sharing, provider networks and other coverage rules are commonplace each year. yet research suggests that inertia is widespread. but sadly, there are too many plans, too many variables to compare and to do meaningful choices among plants. the affordable care act offers a

blueprint for constructing a high-value health care system where insurance plans can, physicians, hospitals and other providers are paid accordingly -- according to the quality of care that they provide. medicaid is the incubated for many of these reforms. as such the aca includes a set of policies designed to make the medicare advantage system more efficient and to enhance plan quality. alongside physicians, hospital and other health care providers, medicare advantage plans have been and should be playing an important role in this transformation the medicare advantage provisions included in the aca are ultimately intended to secure higher value care. in other words, better quality at a lower price. recent changes to m.a. by the aca have strengthened the program. in addition to improving medicare's overall financial outlook, the aca enhanced medicare advantage through added benefits, better cost sharing and approved plan quality.

for instance, the aca expands coverage for preventive services, prohibits medicare advantage plans from charging higher cost sharing for renal dialysis, chemotherapy and skilled nursing facility states. and requires that plans than 85% of beneficiaries premiums and federal payments on patient care. these and other changes that the aca has brought to medicare advantage should be preserved. it's important to note that the aca savings sector largest medicare advantage payment adjustments are producing positive returns for the medicare program. benefiting both current and future beneficiaries. improved cost efficiency and medicare translates into real progress for older adults and people with medicare, and people with disabilities. for example, in 2014, the part b premium remains at its 2013 level amounting to 194 promote their but many predicted a sea change to medicare advantage would lead to widespread destruction of the plant

landscape, we've not seen that among our clients that we serve generally. the premiums, benefit levels and availability of plans remain relatively stable. in fact, a medicare advantage market is now better and more robust for consumers and enrollment continues to be on the rise this year. bother if it's the and increased incidence of slimming of medicare advantage provider networks this year, we must stress that we see this every year. changing provider networks are an inherent risk of any managed care system. our advice to medicare beneficiaries remains the same trick people can switch to another medicare advantage plan or back to original medicare, traditional medicare, during the fall open moment but which is occurring right now in any situation where a current medicare advantage plan does not meet their needs. in close and believe congress should do more to simple by plan selection and coverage tools for people with medicare advantage.

we recommend approving beneficiary notice regarding annual plan changes including changes in plan networks. and we further streamlined standardizing plans, improving the appeals system and adequately funding independent counsel resources like a ship program. we also urge congress to expand the range of supplements are coverage options at the to people with original medicare with those cases were a medicare advantage plan is not the best fit for beneficiaries need. and also tell people to go back and forth between the medicare advantage plan and the original medicare program with more facility. we really thank you for the opportunity to testify today. >> chair thanks the gentlemen, now recognizes dr. margolis for a summary of his opening statement. >> thank you, chairman pitts and ranking member pallone, and esteemed committee members for the invitation to address you today. i come to address the merits of medicare advantage, having had many years of experience in the program, and can tell you without any hesitation it is the most effective federal program

moving seniors to higher quality care through coordination and measurement of quality and outcomes. i come wearing multiple hats as my 40 years in health care policy have taken me many directions. the california association of physician groups, which i chaired in which represents over 90% of all coordinated care patients in california. my board representation and chairmanship, which has proven through extensive management and transparency that the quality and measurement that occurs in medicare advantage is superior to the fee-for-service original alternative. as you mentioned, my role as ceo of health care partners, but mostly as a doctor the practice for over 20 years in an urban inner-city hospital in los angeles, serving primarily seniors and other disadvantaged

patients where i saw that without equivocation, the fee-for-service mentality of the original medicare, or as we like to refer to it, fever volume, is not coordinating care for seniors. -- key for falling. seniors have multiple chronic diseases who are vulnerable and especially those that are poor and with fewer resources need an ideal system, a system that helps with great information and a physician advisor to help them navigate through a very difficult and complex health care system, and manages them longitudinally across time. as a physician i can tell you that every physician i know manages his or her patients with great desire to be the best outcome that does that have the infrastructure to coordination and resources to follow that patient longitudinally through their health care needs.

and that is the one major advantage that coordinated care population health managed care, however you choose to name it, population health for those that perhaps are unfamiliar with the term really is having patients selected doctor through a network, through a health plan, and then having that physician organization take responsibility through a per member, per month calculation for the total care of the nation. it totally changes the incentives and incentives drive behaviors. the behaviors within a coordinated care program our want of health promotion, defer and delay chronic disease through much more intervention, disease management, pharmacy management, making sure the patients get to the specialist, get to the visits, have older programs. and so let me explain a little bit about how that works within our organization, which is

relatively large. we care for now over 250,000 medicare advantage patients through our 11,000 affiliated and employed physicians in five different states. the way that works is through great information technology, which is a big investment but an important investment that allows us now to segment the patient population into areas of need and design programs specifically to those areas of need. so for instance, that our home care programs for those most vulnerable but have trouble getting into the doctor's office and avoid 911 calls and trips to the emergency room. there are comprehensive care clinics for those folks that have very complex diseases where there's individual care plans monitored by a team. and i have to say without equivocation, health care is delivered is a team sport. it's great to have a physician in the center of the team but

having care managers, having disease management, having social workers, having dietitians, having homecare capabilities is a key component of making it an effective system. so i ask you without any equivocation, please continue to support him a. strengthen it, help it grow, supports special needs programs, support moving the tools into medicare advantage and in a coordinated way with the states. it's a very vulnerable population that could use congress to support with cms to make that effective. and with that i would you for the last six seconds back to you spent now recognizes this goal five minutes for summary of her opening statement. >> hello. thank you, chairman pitts, ranking member pallone, and members of the subcommittee to talk to you about medicare advantage. as a senior fellow at mathematics and for the past 20 plus years, i've been examining

medicare advantage for a long time analyzing trends and plan participation enrollment and benefits look at market dynamics in studying the implication for beneficiaries, working with the kaiser family foundation and others. my testimony today makes three points that i hope will inform the congressional debate on the medicare advantage program today. my indie pended findings i should say in general are closely aligned with the positions and opinions expressed by medpac. first and foremost, and we for this and a few other places here today, the m.a. program is strong with rising a moment and widespread planned availability that's expected to continue through 2014, despite the concerns that the cutbacks in payment would discourage plan participation or make plans less attractive. there's 15 million people in the program, 29% of all beneficiaries, and i'll try my.

although it varies a lot across the country and i think it's important to recognize that health care is local and the circumstances are different, the kind of care dr. margolis mentioned happen happened in soe places and not others. second, despite concerns over plan terminations in 2014, there are almost as many new plans entering into 2014 as terminating come and since the ac was enacted, average in premiums to enrollees have declined and they will still be lower in 2014 than they were in 2010. exit and entry are essential characteristics of a competitive market. medicare beneficiaries that they have an average of 18 medicare advantage choices as well as the option to stay in the traditional medicare program and with without the supplement. medicare beneficiaries can keep your plan. it's called medicare, whether you're in medicare advantage

over medicare traditional. second, it's difficult to see the rationale on a national basis for gang private plans more than medicare currently spends on the traditional program. particularly when there's so much concern with the deficit and debt. medicare has historically said payments to m.a. plans bundle or equal to what medicare would expect to play in the video program who enroll in the plan. this changed in 2003, and by 2009 payments were considerably higher than medicare would've paid for the same beneficiaries if they were in the traditional program. this cost every beneficiary more and added part b premiums and it provides little incentives for m.a. plans to become more efficient. when i examined the 2009 plan data i found wide variation in m.a. plans costs relative to traditional medicare spending. even going for plan levels, plant types and payment levels.

that suggest there was room for a lot more efficiency in the program variable across plains. and the policy changes that were in the aca reflect recommendation that congress' own medicare payment advisory commission has advocated for years. third, many of the concerns raised about 2014 offerings either to my mind from what i've looked at are not consistent with evidence or in part of the way competitive markets work. and they are already addressed by protections in place in the program. only 5% of beneficiaries, of enrollees in 2013 will have to shift plans. most of the up to stay in the same type of plan. the average premium was down 21% from between 2010-2013, for a beneficiary, and premiums stable in 2014. some beneficiaries will see their premiums rise in 2014, but

he'll still be paying less than 2010. and if historical console, some of beneficiaries will splinter out so that they can get a better deal. clearly, payment reductions can't encourage plans -- discourage plans to participate in medicare advantage but this doesn't yet appear to be an issue. medicare has a number of protections for the such as network adequacy and quality standards, required a notice of change in plans and other means. because in mate choice is voluntary there also is the option to return to traditional medicare. in its 2013 march report to congress, medpac concluded that payment changes under the transform have improved the efficiency of the program and made encourage plans to respond by enhancing quality. all the while continuing to increase in mate involvement through plants and benefit packages that beneficiaries find

attractive. i believe my analysis to test what is consistent with medpac's conclusion. thank you for your time and i look forward to any questions. spent the chair thanks the gentleman and now recognizes mr. kaplan for a summary of his opening statement. >> chairman pitts, ranking member pallone and members of the subcommittee, thank you for the opportunity to testify today. my name is jon kaplan and i'm a senior partner at the boston consulting group. i have a health care background that is over 25 years working close with both nonprofit and for profit health care entities throughout the entire health care industry. earlier this year i let a bcg team to analyze the differences and health outcomes between patients enrolled in traditional medicare and those enrolled in private medicare advantage health plans. we found that patients enrolled in the medicare advantage plans have better health outcomes than those participating in traditional medicare. there are three key findings from our research.

first, the m.a. patient and our supper received higher levels of recommended preventive care, and had fewer disease specific complications. second, during acute episode required hospitalization, the patients in the m.a. plan spent almost 1% less time in the hospital than those in traditional medicare. in addition they had a list readmissions into the hospital. finally, the percentage of people who died in the year we studied were substantially higher in the traditional medicare sample than those in the medicare advantage of sample. this is a striking finding and one that we hope to export further in a longitudinal multiyear study. our studies that directly address the causes of these differences. in my experience, however, the key factor is m.a. itself and how the plans are organized and managed. first, these plans ally with financial incentives with clinical best practice.

second recruit most effective providers and include only those who practice high polity medicine. third, they put a strong emphasis on active care management and invest resources and prevention to keep patients healthy, stable and out of the hospital. there are many indications in a steady at these three mechanisms are responsible for the better health, the m.a. patient. take the example of diabetes. to clinical standards are frequent hba1c testing and screening for kidney disease. our data show that the an example have substantially higher number of oath tests than the traditional medicare sample. this stronger focus on prevention helps keep patients healthy and avoid the need for a highly disruptive and expensive acute-care intervention. for example, we found that diabetic patients in m.a. had dramatic the less foot ulcers

and amputations than those in traditional medicare. client incentives and active care management also help explain lower inflation rates. take the example of emergency room visits. in our traditional medicare matched sample, about four out of 10 of the patients visit to the emergency room at least once per year. for many portions of medicare advantage, this figure dropped to around two out of 10. our last -- one last time to share among the three types of m.a. plans we studied, the very best health outcomes were for those patients in the cabinet in m.a. plans but if i suggest that capitation is effective at supporting provider investment in preventive medicine and active care coordination. let me conclude by suggesting some implications of our study for health policy. in my opinion, medicare advantage plans are an extreme, an example of a successful public-private partnership. these plans represent an integrated care delivery model

that uses effective provide incentives, real-time clinical information and care coordination capabilities to improve quality and lower cost. in my opinion, federal policy should be supporting and not discouraging more medicare patients to enroll in m.a. their health outcomes and entire u.s. health care system are likely to be better as a result. thank you for inviting me to speak, and i look forward to answering your questions. >> that concludes the summaries. before we go to question i would like to seek unanimous consent to cement for the record a letter from the 60 plus association's. without objections ordered. i will now begin the questioning, recognize myself for five minutes for that purpose. mr. holtz-eakin, since passage of the president's health care plan, millions of americans and their families have received insurance cancellation notices. do you think medicare advantage

may be obamacare's next victim? and if so, what might beneficiaries in pennsylvania expect over the coming years in terms of plan choices, costs, foregone benefit offerings and provider networks? >> thank you, mr. chairman. indeed, i am concerned about the future of medicare advantage. as i said in my opening statement. the work we've done on the implications of aca cuts, for example, in pennsylvania would suggest that in 2014 there would be an average loss of benefit for beneficiary of about $2200. that this is about a 19% reduction in those benefits. and that we would see a decline in the available of medicare that is to about 113,000 pennsylvanians. those numbers for 2014 are of concern, but i am more troubled by the trajectory over

succeeding five years and the full cuts under the affordable care act as to whether medicare events were remain a viable option within the medicare program and deliver the comprehensive benefits. and i just want to echo the statements that we heard in many of the opening remarks. the medicare population is so different than when medicare was originated. it is now a population that has multiple chronic conditions and comorbidities. it requires a coordinated approach to care. that's the route to both better health and a financial future for medicare as a whole. medicare advantage i think is an import stepping stone spent thank you. dr. margolis, as you know, this committee has been committed in a bipartisan form to address access concerns in part by improving the flawed physician payment formula will for producing medicare doctors. howeverdoctors. however, i believe medicare advantage plays a key role in ensuring the physician and patient relationship for seniors

and disabled. what impact, in your opinion, will the permanent solution to the flawed sgr formal have on the viability of the medicare advantage program? >> thank you, mr. pitts. there's no question that the cuts that are proposed and coming up -- coming down on medicare advantage, and i was specifically stressed the rescaling of the risk adjustment factor which really was a key component in what i believe is making it a positive incentive to care for the sick and fragile patient was to be paid based on the duty of the patient. .. -- the acuity of the patient. .. the people will not be able to gain care if they

are really sick. and that is a potential, serious problem. and i would also like to say that medicare advantage should not, in our opinion, be the pay for foreign sgr fix. i think as you for from all the other witnesses that it is extremely important for the seniors of our country, 10,000 more of which are inching medicare everyday to be ableo to be able to access good good and eseciad care and especially for that at% of patients that ae are eating up 52% of all health% care dollars, the thickest anddl most fragile patients to access the doctors of their choice and get the care they need.he >> here's a question for the panel. matt occurred and it has aess nd proven record of success and iss popular with seniors because it provides better services, higher quality of care and increased her coordination. to ensure the program'se ar viability, or several reform proposals for medicare advantage

that have further discussion of feedback like overlaying a value-based insurance designed over the medicare program to address the substantial variation of value across health care services and providers. bipartisan policies such as those introduced by representative keith rothfuss of pennsylvania share choices do not limit their options to traditional ffs or their existing plants. improvements to the program special needs plans and improvements to the program risk adjustment framework would improve accuracy of payment and account for chronic conditions. what if any short-term reforms should be considered that would ensure the viability of the program and promoting maximum value and high quality, coordinated care for medicare beneficiaries? bolster with you, mr. kaplan. >> first of all, thank you, mr. chairman. the best answer that question if

there's a lot of success as dirty as medicare advantage. everybody on the panel tonight and today has that medicare advantage is a program to look out with a very positive reactions. what i think happens fundamentally in the medicare advantage program is that it allows for more of the freedom of choice among the different competitors and insurance companies offering those programs and allows for the members you choose to go into those programs to navigate themselves around to different programs to make a choice than to define what estimate their needs. that sort of freedom of choice has allowed for the programs to prosper based on what they offer to the members to sign for their programs as opposed to mandating things in different ways. so the competitive model amongst the different insurance companies who offer different programs in different states is a strong model that is allowed for the growth of the program to be so successful and effective at pratt to sina medical care

that we are all talking about that we want to do for the senior populations. >> thank you get out of this question submitted in writing and you can respond for the record. the chair now recognizes the ranking member for five minutes for questions. >> thank you, mr. chairman. i'm going to ask my questions of mr. baker because you seem to be able to clear up a lot of the myths that i'm hearing from the republican side. as you've heard, opponents of the aca will save the medicare advantage program will be obsolete because of cuts in the affordable care act. obviously, the republicans basically think the affordable care act is the end of the world. you understand all that. mr. baker, do you feel the medicare advantage program is smaller now and more secure for beneficiaries and before the affordable care act? if you could just answer that. >> sure. there are a couple components to

that. one of the equalization of payments between the medicare advantage program in the traditional original care program. once again, inequity there has been established as well as the fact that part b premiums have come down or stabilized for everyone in the medicare program. the other pieces consumers are better protected in medicare advantage. some plants have increased cost sharing for services like chemotherapy. hire car sharing in the traditional medicare program. the affordable care to the glass of car sharing so sicker beneficiaries are discriminated against. the 85% medical loss ratio required in medicare advantage now, making sure the 85% of those premium dollars, both from consumers as well as the government are going towards medical costs, not other administrative costs. the star rating program where plants have one to five stars based upon their quality and plant performance. this has been an important tool

for consumers to choose between plans and also that quality information has been getting out to consumers than i ain't what more could be done in that regard, but it's very good. the other thing is the out-of-pocket maximum that were introduced over the course of the last few years and have provided important protections for consumers so that these medicare advantage protections not only make the program more equal if you will between the traditional medicare, original medicare program, but also consumers are better protected with consumer rights and protections once they are in the plan. >> so obviously feel medicare advantage is stronger now and more secure because of the aca? >> yes, i do. consumers are better protected within the medicare advantage program because of the aca. >> keeping changes pursuant to the aca to beneficiaries are confident the program might make them more comfortable choosing a

medicare advantage plan? >> i think it does. but the star ratings program with other quality initiatives in the medicare advantage plan has made consumers more confident. we find that folks are looking at these star ratings, looking at these other quality metrics not available are now available under the aca. i think they also are many consumers we talked to appreciate that they have a choice between medicare advantage in original medicare. i think it is also important the original medicare program, the base of all of this be kept strong and be kept as a very viable option for folks that medicare advantage either hasn't worked for her won't work for the future. >> can you tell me how robust the choices are for seniors in the ama program, how many choices today have? the >> rate. on average, consumers have about 18 plan choices and i think ms. gold went through some of

those metrics in her testimony. we find for the most part and this is both true and the medicare advantage program as well as the part d prescription drug road from the consumers who -- the biggest question we have is they have too many choices in there to confuse by the variety of plans spirit over the last two years am in the senate for medicare and medicare services at made some headway and camping on the number of choices that are meaningful. by that, there might be one little tweet to a plan to make a somewhat different than another plan that the company is offering. folks get confused by those streaks that don't have a real substantive component to them. mary choices in that way has helped people actually make better choices. >> and you don't feel -- again, you don't buy the naysayers who say that the aca is just going to mary choices for seniors in the m.a. program? >> it has not at this program.

we see plenty of plan choices in the market where we see clients. once again, our problem and counseling most consumers, really all of our consumers isn't that they don't have a choice. they have too many choices medicare advantage plans. under the fourth passage of the aca and after the passage of the aca. >> thank you very much. >> the gentleman recognizes the full committee, ms. blackburn for five minutes for questions. >> thank you, mr. chairman. thank you all for being here. he talked a little bit about the fragile and [roll call] problems. end-stage renal disease. i recently found out the enrollees that have end-stage renal disease have access to a coordination of care that is not available to others.

is not an option for those in standard and medicare. so why should medicare advantage not be an option for all medicare enrollees? >> thank you, ms. black earth. i support that. i believe the coordination of care is ideal for second fragile patients, especially ps rd. i know there are pilots now at cms to try to incorporate population help thwart ps rd. encourage them to be strengthened. it is an artifact of the way the law was originally written that esrd patients are not allowed to enroll in medicare advantage. that should be changed in my view. the way that works is if a patient has chronic renal disease and roles in medicare advantage and becomes an end-stage patient, they can stay

in medicare advantage. but if a party diagnosed, they're not allowed to enroll in medicare advantage. >> it would be an element of fairness into the system that would allow. >> that would be an improvement. yes, ma'am. >> mr. kaplan, i want to come to you for a minute. i love listening to your hearing today. i have to tell you in my district come seniors love medicare advantage. we've got a program called silver sneakers in our district. people come to town hall meetings. they talked to me about silver sneakers and how they're doing. i've looked at some of the work they've done and the surveys. better outcomes for physical and emotional health, more activity. it's just been a great program. so as i've listened to you all today, talked to me for a minute. we talk about stabilizing medicare, giving seniors more and more options should medicare

advantage not be the platform for medicare reforms and give seniors more choices and options, not less? >> first of all, thank you for the nice comments. i am a huge fan of medicare advantage for the exact reasons you say. it outlines the incentives of the providers and payers worked together to try to figure out the best way to take care of members and patients. when they align the incentives, they start to work on things that the most important thing is to coordinate care as dr. margolis talks about, coordinating care for complex numbers and so forth. but find things that help them prevent having diseases either progress or begin. all these things are aligned. all these things or ideas about what an incentive, coordinating care and offer the benefit of the member. so therefore, i do believe that medicare advantage is a wonderful pilot for us as a society, we as a society.

what it does this shows we can find a way to curb the growth of health care costs. we can find a way to improve -- >> so give greater access and provide better outcomes. >> correct. >> mr. holt eakin, do you want to buy and? >> i just echo the fairness issue that is important. we know that medicare is a whole is facing it very, very problematic financial future if we can find ways to provide better care, we should. this is a route to that. >> let me ask you this. when you look at the implementation of the aca and the cuts that are being made, who is most impacted by the m.a. cut better their? is a seniors, physicians, support system for seniors? wearing your research do you see? yes, sir.

>> this is an pat directly to the seniors whose choices will be it, these benefits will be reduced. i am deeply concerned about the implications. i understand the testimony, mr. baker, bell consumer protections and confidence in the program. that is at odds with the fact the cbo, for example, projects 5 million fewer enrollees in 20 night tina fey felt more confident. we buy 10,000 new seniors every day. i think that is stark testimony for the financial underpinning the strong enough that we'll limit the benefits and choices of seniors. >> yield that. >> the chair thanks the gentlelady. now the ranking member emeritus, mr. dingell for five minutes for questions. [inaudible] >> this is the important moments in the american people are counting on us. it concerns the committee might be holding another hearing to scare people about the affordable care act and its impact on medicare manages when

the facts do not support those claims. the questions i have today will focus on how aca apex medicare advantage as well as traditional medicare. i would point out that when we adopted the idea of medicare advantage, we were told they were going to give us a lot more insurance and a lot less cost to senior citizens. i've heard constant whining never sensed that we have not done that. in any event, we have a problem here because that program is costing taxpayers significantly more in traditional medicare while providing similar services. said mr. baker, yes or no. is it correct been in 2094 passage of aca to cms paid medicare advantage is, planned $14 billion more than the same

care had been provided under traditional care? yes or no. >> yes. >> this averages to about $1000 per beneficiary's? yes or no. >> yes. >> additionally, ms. gold. in 2009, met that report found that medicare breitbart was 118% of that medicare would spend. is that correct? >> yes. >> ms. baker and ms. gold, is it fair to say the reforms made by aca were intended to align medicare advantage payments with traditional medicare payments? yes or no. >> yes. >> despite claims made by some of my colleagues, these reforms have not run medicare advantage. in fact, the program is strong and growing. earnings are doing fine.

salaries, dividends and bonuses and all those other good things to the companies and officers participating or enrolling. mr. baker, how many people are enrolled in medicare advantage toda correct, yes. >> is it correct that medicare advantage enrollment has increased 30% from 2010 to 2013, yes or no? it seems like they are doing pretty well, doesn't it? now is that correct be average but a care beneficiary will have a choice between a team pla plag the favorable to them in 2014, yes or no? >> yes. >> the affordable care act has not resulted in a drastic increase in the number of plans available to seniors who choose to participate in medicare advantage nor as it decreased the number of people participating in the program. is that correct, yes or no?

i note that it's provided many benefits to this population and will continue to do so. most importantly, the aca has improved the solvency of the entire medicare program, something which is not popularly addressed by people who were critical of aca. is that correct hospital insurance trust fund is now solvent through 2026 fax that is ten years longer than prior to the passage of aca. yes or no? >> yes. >> that tends to show that it's quite helpful. in 2012, 34.1 million medicare beneficiaries were able to have access to preventive services such as mammograms and colonoscopies with limited cost

sharing. is that correct, yes or no? >> yes. >> 7.9 million seniors have saved over $8.9 billion since the passage of aca and that is thanks to the doughnut hole being closed, is that right? >> yes. >> and it's good to be closed sometime by 2020, is that right? >> that's correct, yes. >> this committee has a great tradition working together to solve the issues of the day. i hope that we can resume this with a focus on the fact rather than continuing to try to scare people about the affordable care act. let's work together and see that ito seethat it has a chance to e the benefits to the society and the practice of medicine and the sick and ailing. thank you for the courtesy. >> i now recognize the vice

chair of the subcommittee for questions. >> thank you mr. chairman and douglas holtz-eakin. do you have any thoughts on the 14 billion-dollar excess costs for medicare advantage the chairman reference to? >> the reimbursement should be aligned with quality and i think the most important issue is the quality of care under medicare advantage has posed for the fee-for-service medicine. >> i was here through the entirety of how i habit came thh the kennedy and through congress and it's becoming pretty obvious today that there were some assumptions of some promises that were made in the affordable care act but have now turned out to not be true and i would submit that those were not just errors, those were actually purposeful deceptions. if the administration had been honest with americans about this

bill, it's very likely would have never passed. so the affordable care act does take $716 billion out of the medicare program; is that correct? and the portion for medicare advantage is about 150 billion; is that correct? so that's taken away from the seniors and the medicare advantage plans and i can't remember speeches given during the democratic convention in 2012 that these were over payments to doctors and hospitals. it's not a cut if it's just taking away money that should have been paid in the first place. do you recall those speeches? >> not specifically but i remember the claims. >> do you agree with the association, congressional democrats that these cuts were ridding the plans of an efficient payments? spinnaker i don't agree with that. they are part of a strategy of cuts that have backfired.

it limits access to seniors in the end and it doesn't take out excess cost and the continued reliance on the strategy is going to damage medicare and not save its financial future. we need to change strategies. >> i agree with you. it was an article in usa today that talks about a story about a patient in dorothy her doctor had bad news after her last checkup but it wasn't about her diagnosis, her medicare advantage plan from united was terminating her doctors contract after february 1 and she also found out she was losing her oncologist at the group. so what kind of seems like this is a direct consequence of cutting the plan by $150 billion. would i be correct in

characterizing that as such? >> they will be increasingly caught in the middle. they have obligations for cost sharing and benefits and there will be less money coming to them created the only recourse would be to restrict whatever excess benefits they had. >> so this is a story that we are likely to hear repeated over time? >> i think that what we have heard is the leading edge of what will be a bigger problem. >> said the association has on its website the myths about medicare advantage cuts and one of them is that medicare advantage cuts would hurt seniors abilities to hurt her -- see their doctors. if the current plan allows you to see a plan to veto physician nothing will change. in light of this information, do you think that is an accurate statement? >> no i don't and it will be increasingly inaccurate over time. to judge it by 2014 is a mistake because of the foreseeable future that concerns me the

most. >> i candice gave the notion that the entirety of the affordable care act was sold to the american people on deception. the consequences of that deception are now coming more evident every day. i'm particularly sensitive to the fact patients will be excluded from their doctors. i wish the administration had been more honest and again i can't help but feel it was an active and purposeful deception. let me ask a question following up on some of the stuff chairman dingell was asking. the cuts of medicare advantage of the cuts were taken out of part a and b. but not reinvested; is that correct? >> those cuts will be used to pay for medicaid expansion and insurance subsidies and exchanges. the money will be gone the moment they are spent a velocity there for medicare to be. >> i'm just a simple country doctor that you are an economist so how do you reconcile the fact that they are claiming that is a savings that is increasing the

solvency when the money was taken and spent for some other activity? >> asked us to fight, that is an accounting fiction. there are no real resources to pay the bills from providers for real patients. >> i will yield back my time. >> the gentle lady from florida for five minutes for questions. >> good morning and welcome to the panel. i would like to thank the chairman and ranking member for holding this hearing on how the affordable care act is improving and strengthening medicare and medicare advantage. according to a study that was done a couple of months ago, in my area of florida where we have a large percentage of our grandparents and parents who rely on medicare, a number of statistics jumped out on the improved benefits and medicare. one is what mr. dingell mentioned the closing of the doughnut hole for the

prescription drugs. in the greater tampa bay area, over 77,000 of my neighbors now have major savings in the drug cost under medicare part d. due to the drug discounts. they have been worth over $100 million to the medicare beneficiaries in the greater tampa bay area. that is very substantial and that is due to the affordable care act but also due to the affordable care act just in the greater tampa bay area over 100 million seniors now have medicare coverage that includes preventative services. they can go get the mammograms, the colonoscopies without copayments or deductibles. that is a very important improvement. mr. baker i think you testified that these improvements apply in traditional medicare and the medicare advantage; is that correct?

to make some plans that offer those preventive benefits and others did not. and of course traditional medicare to ask so wha not so wa and it is made sure they were in the traditional medicare and all medicare advantage plans as well. >> i would like to take a page out of how mr. dingell asks the question sometimes and i would like to get a yes or no answer. earlier this year to public and the house adopted a budget that proposed drastic changes to medicare. the budget that was adopted by the end of traditional medicare and medicare advantage and put in place a new system in 2024 so if you are 55 or younger this would really impact your future and medicare. rather than an role in the traditional medicare advantage under the republican budget instead beneficiaries would receive a voucher that would privatize medicare and you would get a coupon and most analysts

raised concerns that this would in essence shift their significant cost to our parents and grandparents that rely on medicare. it appears to break the promise that he will be able to live from the -- a catastrophic diagnosis. i would like to know from each of you do you support that kind of change to medicare and medicare advantage, yes or no? >> i do support of change. the report that came out this summer would save the cost for beneficiaries and the government indicating it had broken the increasing cost. >> all right. and mr. baker asked. >> i do not support that and our organization does not support the proposal for the reasons that you indicated that it would not.

the cost would not keep up with healthcare cost and more would come out with seniors and they would lose the healthcare they currently have. >> ibb that is important for congress to assure the security for seniors. my apolitical answer which is hard to do in washington i'm sure is to say this is about patient care. >> yes or no. >> be integrated and coordinated care system development whether through that program. >> would you review the proposal? >> we don't generally take positions on legislation. we let you do that but there is there's anumber of technical qus and issues that have been raised about the cost shifting that what happened to the medicare beneficiaries that are important to answer before any change to a very popular program were made.

>> i believe that the idea of using a voucher type system which is very a ten to what is being done in the medicare base already is a good idea. >> that republican paul ryan budget included provisions to repeal the affordable care act including the important reforms to medicare, the closing of the coverage gap known as the doughnut hole and preventive services that are such a great benefit to many of the neighbors and a wellness exams and important medicare fraud prevention provisions. do you support the repeal yes or no because my time has run out. >> just yes or no real quick because my time is up. >> yes or no. [laughter] >> of the reforms in medicare to include it in. >> there are parts that should

be repealed. >> beneficiaries would be pretty upset if they were repealed. >> i think protections are important. they need to be continued and be in place. >> i would answer differently depending on the provision. >> the chair recognizes the gentleman and the chair emeritus for fiv five-minute. >> i arrived late and i didn't get to hear the testimony. >> the gentle lady from illinois for five minutes for a question. >> i just wanted to make the point is tha that i think that representative castor was getting at to remind my colleagues who are now complaining about cuts to medicare in the affordable care act these were the same cuts

that were included in the budget but instead of strengthening medicare, the republicans wanted to give tax breaks to millionaires. a couple of questions. the implication by my colleague was changes that will eliminate the networks are caused by the affordable care act and i'm just wondering in your research i know with part d. is important and make sure the formulary is the same. with medicare advantage, or that change is likely in the network or something prior to the affordable care act as well? >> i think there is a lot of volatility in this marketplace as well as in the part d.

marketplace. so every year we are very clear with the beneficiaries that if they are in the medicare advantage plan they need to check that coverage because the formularies which is a list that changes every year and provider networks, the providers also decide to leave the network or to no longer be involved. >> but this isn't new -- >> this is an inherent part of the plan that has been around since the mid-80s and even before. so this is an ongoing issue. this kind of instability if you will is in hair and and it's part of the risk of the plan that goes along with the benefits that we've talked about as well. >> they said something about the precarious future of medicare and funding problems. i wonder if you can talk about

the effect on solvency that the affordable care act has had on medicare. >> i think we noted earlier as i was responding to mr. dingell blank commented that there is a longer period and to the extent that has been looked at through the years as a bellwether for the health of the medicare program were one of the best places we have ever been in the second, something to the benefit of all people is a stable part b. premium. the medicare costs are at historically low growth rates. >> and that is what you have to say. >> all of the people with medicare are seeing the benefits of the cost containment in the

aca that have occurred in private plans into the government-run medicare program. >> i also wanted to talk about the low income seniors. medicare provides cost-sharing protections for low-income seniors through the medicare savings program. i'm wondering if we are truly concerned about protections for love income beneficiaries rather than paying more than medicare to the medicare advantage plans wouldn't it be better to invest additional resources in the medicare savings program improving outreach and enrollment and coverage? >> the short answer to that is yes. we are very concerned. the biggest problem is folks that can't afford their coverage whether they are in the original program or the medicare advantage program and the medicare savings program help lover and come. above medicaid income levels but lower income folks. 50% have incomes over $22,500 a

year and many of them are struggling to afford coverage as well as dental work. is strengthening the medicare savings programs were subsidy programs particularly if we are looking at the sgr into doing that simultaneously? >> that's what i wanted to ask about. we would like to permanently repeal it. the program that pays the part d. premiums is set to expire at the end of the year. so don't you think of the s. time we deal with sgr we ought to do with that? >> it's imperative the program continue to be dealt with with the sgr and continue to reauthorize. >> i yield back. >> i recognize the gentleman from illinois for five-minute. >> thank you mr. chairman. sorry i had to excuse myself during the testimony.

a couple points. one is i like myself and a handful of other staffers make sure that we were enrolled in our new health care plan because we couldn't get confirmation. fortunately i got confirmation that i'm finding out like everybody else i have less coverage at a higher cost. the concern is as it is exhibited by the constituents on medicare advantage we will see the same thing of her in medicare advantage and so i think that this is a timely hearing because it's like everything else in this new movement of health care. everybody is going to get less coverage and higher cost, no matter who you are or where you are in this country because of these before. i was hearing the committee went secretary sebelius affirmed that the fact that they double counted the $500 million.

you can just check the transcript and check the testimony. it took five minutes to get out of. about in the end, she said we double counted because we had a $500 billion of savings out of medicare that is going to go to obamacare and of course we were strengthening medicare by $500 billion. having that as a part of the record, how can we say that medicare has strengthened? is medicare now stronger than it has ever been? >> i don't bb of the trust fund reveals anything about the future solvency of medicare. the facts on the ground are that in recent years the gap between the premiums into payroll taxes going in is $300 billion. >> that is a cash flow deficit.

we get 10,000 beneficiaries every day and the absence of general reform that allow people to get the care that they need and deserve and abby slover cost growth it will fall under its own financial weight. >> for the secretary to affirm, $500 billion that isn't really chump change in the big picture of health care costs. i am getting comments from constituents in the district who medicare advantage folks now their benefits are being reduced. they are losing access to their preferred physicians. this is under the current system now. my question is how much worse can this get for my seniors who opt out for medicare advantage?

again if the strategy for controlling costs is a traditional one of just cutting the provider members and whether its doctors, hospitals, it will backfire. that approach without reform that gives you the prevention and coordination and the better care congress ends up having to put the money back in because you haven't solved the problem. to not put the money back and is tonight bullies i -- deny seniors care. >> to have access to dialysis and the like and i know that you have a special focus in that arena. as the network shrinks especially in rural america what happens to the options, what could happen to the options? >> i think that you heard that the cuts are not advisable in the future. i must say with all due respect to the committee i think that it

appeared he adjustments to get medicare advantage back to the fee for service which was enacted is not the issue that should be focused on. what should be focused on in my view is that we are potentially reducing the payment for acuity of the sickest patients which will ensure avoiding the sick patients. those are the ones that need coordination and population health and the access to good care and that is the issue that i would hope the committee would take a serious look at because without that, while we may or may not have shrinking networks and i think that we will because even today we see news reports of united and others canceling thousands of other doctors from the program, the real issue as a physician and someone that cares about seniors is the sickest and most fragile patients that eat

up all of the cost of healthcare are the ones that ought to be protected by having appropriate acuity adjusted payments for the physician groups that are managing it in a way that supports better outcomes for transparency all of the store managers are positive that support quality performance outcomes and pay accordingly based on managing the sickest seniors. >> thank you ranking member for having a hearing today and the us is foassist for taking the to testify. we are critical that they have low to moderate incomes and complex healthcare needs my first question is it did extend the life of medicare by putting more money on medicare and the

yes or no answer to that but it actually extended the life of medicare. >> i have no knowledge of the fact. >> i don't study the trust fund. >> i think that's -- we may have a difference of opinion but i think that's acknowledged it did extend the life of medicare with the affordable care act. mr. baker in your testimony you discussed changes to medicare advantage under the affordable care act that included policies to make the medicare advantage more efficient and reduce overpayments to bring the plans were in line with traditional medicare and enhanced plan quality can you elaborate on some of these improvements in managed care under the affordable care act? >> making sure across the board

of the plans are covering preventive services as well as the original medicare. another is the easy 5% medical loss ratios in ensurin ratio su% from every dollar. as a consumer dollar were government dollar. once again the star rating program and the out-of-pocket maximum driving has provided an important financial protection to folks within a medicare advantage plan into the store ratings have made it easier for the consumers to choose among the plans they do have many choices in the market and the problem we frequently see his folks not being able to choose among the plans that has helped. >> it actually refusing to quit taking the general medicare because they want to bother patienttheirpatients to go in.

>> what would you have to further improvement of care advantage? >> once again, we are very supportive of some of the things that have come out of medicare advantage. we want to make sure that there are meaningful choices in the plans, so really standardizing in the sense that that is appropriate and possible. we would love to have more data on the appeals to see where there might be problems in a particular plan. we would like to make sure there are better notices so this issue that we have been talking about with regards to slimming down some of the networks we do think that there could be more pinpoint in particular notices sent to consumers in the fall. many find out about this from their doctor and it would be nice if they found out about it from their plan in september when they get their annual notice of change so they can be ready in the < period. finally beatnik sure that it continues to be a strong

programming and database program for folks and by that we can help by increasing the availability of medigap policies and people can switch back and forth between the programs as necessary. hispanic we have heard of medicare advantagmedicareadvante changes in aca and medicare advantage would lead to widest breadth disruption of the market. from your perspective, has this been the case? >> we do not see widespread disruption at this point. we have seen some of the provider issues with providers leaving the networks. two things there. they have either chosen the plans that continue to have those providers and their network or have reverted to the original medicare program where the proprietors are available to them. >> you have written extensively about medicare and the scientific studies must meet certain established standards to

be accepted including the transparency and peer review and confidence levels to establish the validity. as a professional researcher i'm interested to hear your thoughts on a study which in my opinion the standards i believe there are many questions that we need to have answered before we can definitely say that the results have great meaning. would you agree that these are some of the questions we have answered before the validity of the conclusions as a result of mr. kaplan blank study? >> usually when you have a study they undergo the methods laid out. i didn't have time to do a thorough review of the study but both ie and a colleague looked at it quickly and the details that you would want to see which would ordinarily be there didn't appear in the paper. it was a sort of finding that over one year so many people and

i don't think that anyone else expects that is a possible findings of there are some real questions about the risk adjustment and the selection of the facts that are in the study. >> i'm out of time. >> mr. kaplan do you want to take a moment to offer a response? >> i appreciate the comments. thank you for the question. we did have our studies reviewed and we were surprised by the findings. that caused us to pause because we were so shocked by the data we didn't have an agenda walking into this. so we did have it reviewed by a number of organizations and medical centers to challenge what we were saying. i understand she didn't have the time to review it to be thorough

but we went through a substantial reviews and what we said in this is the one finding about mortality was the one that had the greatest concern and why we wanted to go forward in a longitudinal study as opposed to looking at it retrospectively but i wouldn't throw out all of the findings. >> we recognized mortality is the one most concerning and no one wants to publish the fact if you sign up for medicare advantage you have a hyperbola buddy of living than if you sign up for the medicare fee-for-service rate it was a finding that we found. >> it wouldn't have been accepted in the journal because the detail was unfair. i'm not saying there may not be questions but the detail wasn't in the report to know whether in fact that was legitimate or not and it wouldn't have gotten through the peer review. >> we had it reviewed by the leading academics because we wanted to get out at the market as quickly as possible. >> we now recognize the doctor

for questions. >> thank you very much. i would have to say that mathematica policy research might sound a little more highbrow than boston consulting group that if any of you know anything about the boston consultative group it is one of the most upstandin outstanding s in the country and i do know a little bit about that. in your testimony you suggested, and i'm paraphrasing a little bit, but you suggest that the president fulfilled his promise to the seniors when he said if you like your healthcare plan you can keep it. if you like your doctors you can keep her. and you said it's called medicare and suggesting implying if you have a notice from a medicare advantage plan that you have selected that you are no longer going to be able to remain on the plan or you would have to get out of the business because of the 14 billion-dollar

cut, 14% cut over ten years something like $300 billion k. it was okay because you still have medicare fee-for-service. i would suggest that it's pretty disingenuous to say that if you like your plan you can keep it because you get kicked out of medicare advantage and you can go to the medicare fee-for-service if you can find a doctor. it's clear that the medicare advantage program is under attack and that the beneficiaries are being able to feel the effect of the over $300 billion of direct and indirect costs included in the obamacare and with plan cancellation notices that said tens of thousands of the country seniors, some of the most vulnerable citizens are faced with this uncertainty that i just talked about. individuals are losing coverage that they are happy with and the doctors with which they are comfortable. this is a tragedy.

a bill that was rushed through congress without any serious debate strictly partisan vote is now impacting people's lives and their personal healthcare decision. mr. holtz-eakin would you please explain to the committee the reality of those potentially millions of people, seniors who lose coverage over the next few years especially when it comes to a reduction in the financial security and benefits? >> i think this is a very real possibility. it is one thing to mandate that the plan covers certain benefits and offers us to seniors and it's another thing to be in existence so they can take advantage of it. in the absence of a financial situation they will not have those choices were that care and in deed they've already made that choice and will see their

plans taken away from them. >> the distinguished chairman emeritus had to leave but she made thahemade the statements th us about the $14 billion but it would save. he was only presenting one side of the balance sheet. what was spent on medicare advantage whether that is a little too much is open to question. but the savings that occurred to medicare, and we the taxpayer because of the medicare advantage program that has paid the medicare and all the features of traditional medicare fee-for-service does not have. this benefit is used by seniors and all walks of life and is prevalent for the seniors that i

think that you said earlier with lower incomes. to the benefits and coverage will affect over income seniors more vertically than others. >> 75% will be experienced making less than $32,000 ballpark. >> what with the loss of the project will cost me into the population's? >> they are the most formidable and in the program that has given them not just the services into traditional fee-for-service, but additional services and in a fashion of coordinated care and quality outcomes. it is a loss in the personal choice. >> i appreciate your leadership on this issue. seniors are just now learning that the upheaval of the healthcare system is not limited to the individual insurance market.

at the purpose of the hearing today they now know that it will affect them as well. and they may lose benefits. we have heard testimony from mr. holtz-eakin and mr. kaplan. seniors may lose benefits and access to doctors and be forced to pay more for the coverage, plain and simple. and i yield back. >> the gentle lady for five minutes. >> thank you mr. chairman. welcome to the panelists this morning. from what i have read over all the medicare beneficiaries should expect and responded to the question that we are answering today. in part those improvements are made possible by the savings that came from equalizing the reimbursement of medicare advantage and those of

traditional medicare. as a family physician and an old fee-for-service, i especially think that with the reform that the outcomes from both can be equally beneficial to the beneficiaries. but i represent a territory of the u.s. virgin islands and sometimes we have unique circumstances and suffer unintended consequences. i want to ask a question on behalf of my colleagues from the puerto rico. with the revised methodology for medicare advantage plans using benchmarks based on the fee-for-service should it coordinate the timing of the medicare advantage and the fee-for-service processes? for example, cms put out the 2014 fee-for-service patients rate that changed the medicare disproportionate share payments to hospitals but this was after

the medicare advantage process of 2014 has closed in june presenting the medicare advantage plans from recovering the substantially increased. shouldn't they address this lack of internal coordination for 2014 and the harm to the plans and beneficiaries? >> clearly i'm not an expert on the ratesetting that i would say that my understanding is that medicare advantage base rates are set on the equivalency and it makes very logical sense to me that we should have all of the built in the fee-for-service cost in the base rate when the medicare advantage rates are s set. so that would answer or direct and answer and i think it is well known that cms has not

calculated the fact that it would probably be pushed out further so that they haven't given credit to the fix each year in setting the base for medicare advantage. so there are a variety of medicare advantage issues i think related to how medicare base rates are set. >> i hope that answers the question. i want to ask a question. we have heard a lot about the spikes and premiums. while some plans have increased costs, isn't it true that overall average premiums paid by the enrollees have declined since the affordable care act was enacted, and can you elaborate a little more on the premium changes. so what factors contribute to the differences of the premiums among the plans?

like me add another part to the question because of time. is it true that more than 70% of beneficiaries that are in the traditional medicare are the ones subsidizing the lower premiums for medicare advantage? >> taking the second question first it is true all beneficiaries subsidized plus the taxpayers because that covers it, too. the costs vary a lot across the country into some of them are more efficient than others and some providers are more efficient than others. premiums have difference fee-for-service payments and in some areas of the country providers are stronger and they are able to negotiate higher rates so there's less money available for extra benefits. in some areas of the country some of the plans decided to give it back in less cost-sharing plaintiff service rather than lower the premiums

so there are a lot of reasons things differ. the spikes between doctors and health plans has a history that goes back years. you're trying to get the most you can out of the system and at the best thing the policymakers can do is to set good standards to say we want to buy quality and value and to reinforce that i think they do start to do that and getting those right in figuring out across both programs, both medicare advantage and fee-for-service health to make the care better for the beneficiaries because i don't think that care is as good as it should be a matter what you're in across the plans which isn't even all their fault which has a lot to do with providers in different areas and how willing they are to get together and how fragmented they are and especially for the beneficiaries that have chronic illness they

need to providers to talk to each other and that is hard to change. the plans are dealing with that and we are dealing with that otherwise the beneficiary gets cost with the bill and the costs go up. >> the gentleman from louisiana for five minutes for question. >> i thought i was a way after. you said there should be better coordination for care. i thought that your testimony was most about what the patient experiences as opposed to what the economist might say. just point out when using the premiums would be lower relative to ten, that is because the market is offering lower-cost premiums with higher deductibles and allowing people to take their choice and therefore they are choosing a lower-cost. it's not a function of -- that

is the function. a stomach i don't believe so. we don't have good data on the other cost-sharing but i don't believe there is evidence why that has happened. >> as common sense would suggest that people are voting with their pocketbooks and vote for a lower-cost plan. doctor margolis. we had a controversy between mr. kaplan and ms. gold that says they are not sure that there is improved quality data. your testimony is excellent. my gosh, when you show the plans versus the fee-for-service and the readmission rate is so much lower and the number of hospital days, etc. that is proof of what you ar were disturbing is the coordinated care is that a fair statement? >> thank you for that compliment, sir.

>> there are things that are very evident. first of all i'm a high promoter of transparency and quality transforming. so i recognize the star program as a very good step forward.rwar i wish there was a similar program in the fee-for-serviceir medicare so we would have some evidence of whether or not medicare and fee-for-service is creating. >> let me emphasize that though because i take care of special needs patients like you mentioned end-stage renal disease. that is where coordinated care is most important, yet you described the cuts that go to the special needs program, correct? >> if we cut through this risk adjustment rescaling the benefit of adjusting the payment based on acuity, we then start to incentivize what used to be

called cherry picking which is avoiding high cost patients. that is a disaster for seniors and as you can see in the written testimony if you manage the high cost seniors with comprehensive care and palliative care and end-of-life care with all those kind of innovative programs you can make a germanic reduction in utilization and. >> you made your point and i believe it. i've been struck that ms. gold and mr. baker continue to say they've not yet seen the problems that we are predicting and get to this wonderful graphing your testimony shows that we are just on the leading edge of these cuts into that there's compounding cuts that go through the 2019 where there is dramatic cuts ultimately to receive. i characterize the graph correctly? >> yes sir. it's why i said -- spinnaker and sorry. i just have one minute 30 seconds left. you have been describing the

things that happened to these programs with special needs plans based upon 2015 but if we extrapolate that out and out mr. baker and ms. gold come back in 2019 at that point it's fair to say more than likely not a will be able to say at this point have seen a negative impact of the accumulative cut upon patient care. >> on a belief that is an accurate statement. >> so do i who is going to go home and tell a woman she lost her plan and has a wraparound service that's been able to help her so tremendously. >> it prolonged the life of the medicare trust fund. >> there are no resources. there's no way to pay the medicare doctors bill out of the trust fund flows out the

treasury has spent every dime and it's gone. >> mr. dingell and mr. green suggested that we prolong the life and you flatly say no. with your credentials you totally dispute that? >> i've testified numerous times and in the years since about the fiction of the government trust funds actually being able to pay any of those and it's just a fiction. mr. sarbanes for five minutes for questions. >> thank you mr. chairman. i appreciate the testimony of the panel. >> the congressman said something earlier which i want to respond to. he said seniors are now learning

that the aca is going to cause them harm. i don't think seniors are learning that. i think seniors are being told that by fear mongering members of the other party. they look carefully at their experience over the last couple of years, the period in which the positive impact has begun to be felt. they will conclude that the aca is benefiting them and you look at the doughnut hole. the screening and other care services and wellness visits

where the visits have been eliminated. the incentives put in place to help improve the management of care or chronic conditions in a more sensible way. with a traditional medicare fee-for-service context as well as obviously within the na context. there is just item after item on of improvements which are there because of the affordable care act which are making the medicare plan and the medicare coverage more robust for our seniors. so it's wrong to suggest that this is going to be harmful for the senior population.

this hearing is titled what the beneficiaries should expect under the president's health care plan medicare advantage. and i think they can expect good things. anybody here generally is saying good things about the medicare advantage program. that isn't the dispute but we have. it's whether the affordable care act is having a negative impact on the bay have access to. or a positive impact. so, when mr. baker and ms. gold say good things about the medicare advantage program, which they have, that isn't somehow a contradiction on the other statements and testimony they are offering. i think it's very consistent. it's just that you be leaving contrast to the other witnesses

here that the affordable care act is actually strengthening and improving the medicare advantage act. my understanding, mr. baker, is the premium that was offered initially to the medicare advantage plan, which was i think 114% against what the fee-for-service rate is was done because the government wanted to incentivize the market and the private health insurance industry to come in and innovate and was successful in doing that with 29% of beneficiaries in the plan it shows that that's happened. but because along the way because of the rigorous analysis that we discovered that premium was no longer justified and infected was going through some things that ended up being a waste from the standpoint of medicare programs i've used up

most of my time but can you talk again about two or three of the things that you think the affordable care act has done to improve the medicare advantage program, which i think all of us wants to see remain strong. one is the medical loss ratio eking short list of the money that goes to 85% goes to tackle kerry and leads to the closure of the doughnut hole in provision of the care services. i would also add a -- i haven't talked about this before but the affordable care act does set up a program to enhance coordinated care in the fee-for-service editor program to the accountable care organizations and other mechanisms as well as i think strengthen medicare advantage programs in many states partnering with the federal government with regard to the coordinated care affordable for both medicaid and medicare and that is a generated a program thaprogram that does e

promise and needs to be monitored but looks like it has some promise. >> we recognize the gentleman from virginia for questions. >> i want to highlight an example. my 83-year-old mother reports that her rates have risen for the medicare advantage plan. in order for her to keep the policies she likes she's now paying a higher rate. secretary sebelius was here she claimed the rates were decreasing nationwide. so i did a survey in my district and we found that more had the rates going up, not a huge amount as mr. baker testified, the biggest group or a bigger group was those who stayed about the same area there were a couple folks have reported the rate had gone down. i'm just wondering, mr. holtz-eakin is this the perspective that the medicare advantage rates are going down as secretary sebelius testified earlier this year next.

>> we can get back with the data but i don't think those are the facts. i would emphasize there are differences across the counties, regions and states in the united states to be. >> let me go to this point cause i have a curiosity if that was one of the reasons that i represented a very rural district where it takes hours sometimes to get to the nearest hospital depending on where you're located, particularly since as a result of obamacare and the cuts to medicare we lost a hospital in one of my most rural counties. that was two of the top three reasons for why they were closing the hospital. do you find that it's more likely to be a problem where the rates are going up as opposed to the more urban areas? >> it's much harder to barrow the networks which is one of the ways to control costs because you don't have many choices so they don't have the option to do that. >> in that county they had one choice and now they have to drive depending what part of the

county that you lived a good distance to get to the choice where they also will need choice depending what action they go. i do appreciate that. doctor margolis, i asked you a question, to back in that you were talking about the healthcare doctor cassidy who i respect very much how the cuts are cut and you indicated earlier in your testimony that's going to limit access for some folks. is that going to be worse in the world districts like my? >> i think it's predictable that the cuts will affect the areas where there's fewer choices rather than the urban areas where there is more competition but i can't say that i have evidence to support that. >> that's common sense would lead to that conclusion would it not? >> v. ac at -- ac said from the

10% of the periods away don't think it is payment in the rural areas. i agree there's a lot of problems in areas with managed care and getting it set up but i don't think it's the payment of changes that are causing the problem. >> so you would disagree with the folks that hospital and he would've told them that they were mistaken in looking at their numbers? >> they have a problem but it's not the aca. >> the other was the downgrading of the economy and also responsible to this administration the other two things listed were cuts to medicare. so two out of the top three have hurt my people and obviously i'm concerned about it and i think it's going to affect the elderly also disproportionately represented in the rural areas of my district.

mr. holtz-eakin come in that regard you indicated that we shouldn't be looking at these medicaid advantage rates or the care advantage rates based on 2013, but we should be looking to the future. can you explain that more fully? >> i am concerned that the current experience was at the outset by the demonstration program, the medicare service and attrition program, which i will take this opportunity to say not all of the planes are uniformly wonderful. it's a good idea to have a program to rate but it does not reward good performance and it needs to be reformed so that actually does. but they put $8 billion disguised for the near-term. >> i appreciate that. mr. chairman, with batch i yield back. >> the chair thanks the gentleman and recognizes mr. engel for five minutes for

questions. >> i've been listening to my republican colleagues. they claim that the aca is causing this to happen although that isn't true and when we identify the savings in cost they say how terrible it is. you can't have it both ways. in 2009 prior to the passage of the great paid to medicare advantage plans exceeded that traditional medicare by about 18% and that the aca required changes to the medicare advantage payments rates to better align them with the costs associated with traditional medicare. if the changes were estimated by the congressional budget office to save over $135 billion over ten years. so you just really can't have it both ways. every time that we identify a way to save money by colleagues on the other side of the aisle say look this is so terrible

this is being cut and that is being cut and then they claim the aca is causing the costs to rise. you just can't have it both ways. according to the 2010 medicare payment advisory commission report to congress, at the 2009 medicare spends about $14 billion more than beneficiaries enrolled in the medicare advantage plans than they would have spent if they stayed in traditional medicare. so i want to go along the lines of the questions mr. sarbanes did and ask how did we get to the point where we were paying so much more for private insurers through medicare advantage to provide medicare benefits and is it accurate that reforms would help correct the overpayment problem with medicare advantage plans and play a role in extending the solvency for the beneficiaries? >> yes i think it will have that effect.

>> i think it is also worth noting all of the cuts to medicare that were included were also included in each of the republican budget proposals for the last three years. so under the republican proposals the cuts to medicare advantage would continue. on the fund solvency i want to mention that the way we measure the solvency is by the medicare trustees report and it shows the solvency of medicare is extended and i think that's important to state as well. mr. baker, i know in the past there've been concerns about medicare advantage plans cherry picking and seeking to enroll the healthiest of seniors leaving beneficiaries enrolled. have you seen evidence of this continuing or what steps would the aca take to stop this practice? >> the provision is in the aca that requires medicare advantage

plans to have similar cost-sharing for benefits that are typically used by the beneficiaries and by that i mean a renal dialysis, skilled nursing care and chemotherapy is one of the ways the plans have become more attractive to the beneficiaries and are a way that the plans, something the plans can't use to cherry pick healthy beneficiaries. i think what we see anecdotally and it is now on some of the research that folks typically do go i'd give you could join medicare advantage of a relatively younger and healthier age as they age and become more chronically or severely ill they do this enroll and enroll in medicare, traditional medicare with the thinking that certain prince answered providers are more available in the original medicare program. so we do see that pattern emerge anecdotally in our work.

>> let me ask you this question on a different question. in new york we have about 2100 physicians eliminated from united health medicare advantage provider network and it's expected to impact about 8,000 of new york seniors. this is a business decision made by a private company in the cms is prohibited to say that in hearing itearing and the arrangs between private health insurance plans and health care providers, but i do hope cms will use the authority that it has to ensure adequate provider networks are in place for all plans to help ensure beneficiaries have access to healthcare services. let me ask you if the physicians are no longer part of a specific medicare advantage network what suggestions would you offer them? my understanding is more than 90% of physicians are willing to accept patients under the traditional program so it's moving to the traditional

medicare option for them right now. >> moving back to the original medicare is an option for them or moving to another medicare advantage plan it's our understanding most of those physicians and hospitals or other providers that have been dropped from united or other managed care networks are in other medicare advantage networks or are as you said in the original medicare program. this happens every year to some extent so our advice is consistently the same. we look for another plan that has your provider or return to the original program if that is a better program for you over ol and your provider is also involved in that program. >> the chair thanks the gentleman and recognizes the gentleman from florida for five minutes. >> thank you for holding this important hearing and i think the panel for their testimony as well. doctor kaplan or excuse me mr. kaplan i was reviewing your report about how medicare advantage provides better outcomes and greater savings

than traditional medicare. why does it produce such dramatically better results? >> i think there are two or three more things to take away that drive that. one is the alignment of incentives. so i think that we all understand the incentives are aligned between those that pay for the healthcare and those that provide the healthcare so with that alignment, things tend to be more productive and how they perform. the second point is because of the alignment, what happens is there's a huge investment in the preventive care so when they have the same goals they will try to avoid the acute intervention to fix something that's gone dramatically wrong so they work with the member or the patience to try to manage them through it and the third point i want to emphasize which is what the doctor said the issue you a round many of these members become very sick with time, age as well as where they

are socioeconomically. and when they are at the sickest portion of the 5% of drugs 52% of the costco that requires even greater intervention and greater automation. so when these ideas of coordinating care and aligning incentives are important by all aspects of health care it's extremely important towards the more chronically sick individuals. >> thank you very much. mr. holtz-eakin, in the last congress about 40% of the seniors in my district had medicare advantage plans. they loved their plans and it's very popular in my area. of course again they like their plans. back in 2010, cms chief actuary did a report on the impact on obamacare through medicare advantage. he wrote and i quote we estimate that in 2017 -- and i know you touched on this but the elaborate please -- we estimate that in 2017, when the

provisions will be fully phased in the enrollment and medicare advantage plans will be lower by about 50 percent does this track with your own analysis of these cuts? >> absolutely. as you heard today medicare advantage is a high-quality program, very popular. it's even more popular than nationwide. the senior population is rising. one would expect that if nothing else changed you would see a lot more enrollment and we are going to see less. what's changed is the financial foundation and the cuts are going to make it impossible for plans to survive and those that survive will have to change their networks and cost-sharing and the net result is going to be less availability of medicare advantage. >> next question for you. some sites have been pushing the organizations as a moral for better care coordination and better cost savings. does it promote the same concept

with a proven track record of better outcomes and costs containment? >> maa has a track record and it's by and large a high-quality track record. as i said earlier, not every ma plan is created equal. there is one big difference. seniors choose their ma plan and are assigned to their plan and have no choice and that is a significant difference in the two concepts. >> i yield back mr. chairman. >> of the chair thanks the gentleman and recognizes the gentle lady from california. >> thank you mr. tremaine and to the panel for being here on this issue. serving the second district of north carolina, i've been hearing in since the rollout of obamacare that my constituents who are losing their medicare

advantage are very concerned about this issue as you can imagine. it's showing in north carolina that the cuts to benefits for medicare advantage are over $2,000 per beneficiary. now that we are seeing this play outcome of the things i'm hearing from my constituents or that they are losing their access to care for the physicians, the cost is going up and again, as you can imagine, they are very concerned about this issue. to mr. holtz-eakin. who again is going to be the most affected by the medicare advantage cuts? which sector of the population of the seniors? because i keep hearing over and over again that it's helping chronically ill patients who have this coverage and this is a better plan for that. is that not who we are harming?

>> this is a better plan for those with chronic disease in particular. they have carefully coordinated care, typically low income, typically more minority participants. that's the population that will be affected. no question about it. >> can you identify some of the actual tangible benefits? i know you talk about coordination of care and items like that. are there more specifics we can here so that we all have a better understanding? >> i will feed it to the greater wisdom of mr. margolis. >> what you -- and i actually have another question for you. on that issue you have identified quite correctly that we really need to be talking about taking care of those patients who are at the end of life, the ones who we know those are where the dollars are really being spent. how do you feel about the ipad? the independent payment advisory board that's going to come into play don't you be the?

i do not think that organizations like that should make decisions about individual patient care. and let me just say relative to that very sensitive topic almost nobody wants to die in a hospital if they have support at home and with coordinated care and integrated programs, spiritual counseling, proud of care, pain management and 24 access to caregivers you can avoid almost anybody having that unfortunate event in their family. that's a big opportunity. let's support the special needs programs, the duly eligible and move towards medicare advantage much more aggressively. >> i appreciate those comments and that is exactly why i am concerned about this issue as you are. ms. gold i have to ask you yes

or no. isn't that what you've identified a few moments ago when you said that you thought ordination of care could be better served under another plan and under affordable care act that actually happens? >> i think there's a lot of problems that getting coordinated care. >> that doesn't medicare advantage do that? >> only some plants do it. >> okay -- >> clarification here i did not say that every medicare advantage plan, but i did say that medicare advantage plans offer these benefits. >> yes. >> thank you. just to finish out, we've got about a minute into this question is actually tester holtz-eakin and mr. kaplan. we heard the bipartisan concerns here. we want to make sure that we take care of our seniors. but we can see over and over again the affordable care act is so negatively affecting our seniors with their medicare

advantage plans. just coming from a completely bipartisan perspective, what can we do now moving forward, what would you like to see in medicare advantage that we can move to that we can make a difference because we are going to have to make changes in medicare, yes. and i would like to know from both of you what your thoughts are on what we need to do in medicare so that we can make it better for our seniors. program in the future both financially and because of the care that seniors need that's different than when medicare was founded. medicare advantage is a great steppingstone to the future. it's not the end but it's a great steppingstone but it needs to be preserved, not wither on the vine in the next five years spent but we need financial backing. >> the near term would be risk adjustment issue that dr. margolis men.